Weekly Cotton Market Review – USDA – AgFax

Cotton harvest. ©Debra L Ferguson

Spot quotations averaged 147 points higher than the previous week, according to the USDA, Agricultural Marketing Service’s Cotton and Tobacco Program. Quotations for the base quality of cotton (color 41, leaf 4, staple 34, mike 35-36 and 43-49, strength 27.0-28.9, and uniformity 81.0-81.9) in the seven designated markets averaged 87.06 cents per pound for the week ending Thursday, October 13, 2022.

The weekly average was up from 85.59 cents last week, but down from 104.35 cents reported the corresponding period a year ago. Daily average quotations ranged from a low of 85.09 cents Friday, October 7 to a high of 89.72 cents Tuesday, October 11.

Spot transactions reported in the Daily Spot Cotton Quotations for the week ended October 13 totaled 1,764 bales. This compares to 2,964 bales reported last week and 12,723 spot transactions reported the corresponding week a year ago.

Total spot transactions for the season were 30,994 bales compared to 66,628 bales the corresponding week a year ago. The ICE December settlement price ended the week at 84.79 cents, compared to 82.90 cents last week.

Crop Report

The following information was excerpted from the National Agricultural Statistics Service Crop Production report, released on October 12, 2022

All cotton production is forecast at 13.8 million 480-pound bales, down less than 1 percent from the previous forecast, and down 21 percent from 2021. Based on conditions as of October 1, yields are expected to average 842 pounds per harvested acre, down 1 pound from the previous forecast but up 23 pounds from 2021.

Upland cotton production is forecast at 13.3 million 480-pound bales, down less than 1 percent from the previous forecast and down 22 percent from 2021. Pima cotton production is forecast at 468,000 bales, up 2 percent from the previous forecast and up 41 percent from 2021. All cotton area harvested is forecast at 7.88 million acres, unchanged from the previous forecast but down 23 percent from 2021.

Supply and Demand Report

The following information was excerpted from the World Agricultural Supply and Demand Estimates, released on October 12, 2022.

The 2022/23 U.S. cotton supply and demand estimates show slightly lower exports and higher ending stocks compared with last month. Production is virtually unchanged at 13.8 million bales, less than 1 percent lower than a month earlier. With world trade projected lower, the export forecast is 100,000 bales lower at 12.5 million bales, while ending stocks are 100,000 bales higher. The 2022/23 season-average price for upland cotton is forecast at 90.0 cents per pound, 6 cents lower than last month and slightly below the final 2021/22 record-high price of 91.4 cents.

Southeastern Markets Regional Summary

Spot cotton trading was inactive. Supplies and producer offerings were light. Demand was moderate. Average local spot prices were higher. Trading of CCC-loan equities was inactive.The COVID-19 Pandemic continues to disrupt labor availability and logistics but cities and locales were easing COVID restrictions.

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Sunny and cool conditions dominated the weather pattern across the lower Southeast during the period. Daytime high temperatures were in the 80s. Later in the week scattered rain showers brought light to moderate precipitation to areas throughout Alabama, the Florida Panhandle, and Georgia. Precipitation totals measured from one-half of an inch to two inches of moisture, with the heaviest accumulations observed in central Alabama and south Georgia.

Defoliation was expanding, and harvesting advanced at a rapid pace ahead of the wet weather, which delayed fieldwork. Cotton bolls were nearly finished opening across the region. Backlogs of modules were accumulating on gin yards, and additional gins were beginning pressing operations for the season. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report released October 11, cotton bolls opening reached 92 percent in Alabama and 87 percent in Georgia; cotton harvested reached 24 percent in Alabama and 19 percent in Georgia.

A mix of sun and clouds were observed across the upper Southeast during the period. Daytime high temperatures were in the 70s and 80s. Scattered showers brought light to moderate precipitation to cotton growing areas of the eastern Carolinas later in the week. Rainfall totals measured from trace amounts to around one-inch of moisture. Cotton bolls opening neared completion and defoliation expanded.

Harvesting advanced at a good pace ahead of rain events, which delayed outside activities. According to NASS, bolls opening was at 96 percent in Virginia, 94 in North Carolina, and 89 percent in South Carolina; cotton harvested was at 24 percent in Virginia and 17 percent in North Carolina and South Carolina.

Textile Mill

Domestic mill buyers inquired for a moderate volume of color 51 and better, leaf 5 and better, and staple 32 and longer for first quarter through fourth quarter 2023 delivery. No sales were reported. Reports indicated most mills had covered their raw cotton needs through early 2023. Yarn demand had moderated as buyers indicated finished product supplies were sufficient in retail sectors. Mills continued to produce personal protective equipment for frontline workers and consumers.

Demand through export channels was moderate. Agents throughout the Far East inquired for any discounted styles of cotton.

Trading

  • No trading activity was reported.

South Central Markets Regional Summary

North Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was very light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. The COVID-19 virus continues to negatively impact domestic and international marketing channels, Consumer-goods supply chains, and the labor force overall.

Mild daytime climatic conditions dominated the weather pattern during the week. A cold front brought a violent thunderstorm with locally heavy downpours to the Memphis territory late week. Up to one inch of rain was reported in some places. Daytime temperatures were in the 70s and 80s. Cool overnight temperatures dropped down to the 40s before rebounding to the low 60s. Boll opening and defoliation advanced steadily throughout the region.

Early-planted fields have been harvested, and gins that had sufficient backlogs of modules had begun annual pressing activities. Classing operations have commenced for Dumas and Memphis. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report, released on October 11, boll opening was complete in Arkansas and Missouri, and advanced to 80 percent in Tennessee.

NASS reported that harvesting had reached 34 percent in Arkansas, 14 percent in Missouri, and 13 percent in Tennessee. All of the figures for Missouri and Tennessee were about 10 days behind the five-year average. Virtual and in-person industry meetings were being planned and attended.

South Delta

Spot cotton trading was inactive. Supplies of available cotton were light. Demand was very light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. No forward contracting was reported. Domestic and international marketing channels, supply chains, and labor forces overall are still being negatively affected by the COVID-19 virus.

Warm daytime conditions continued to prevail throughout the region during the week, with temperatures in the upper 80s. A cooling trend late week dropped overnight temperatures from the high 50s to the upper 40s. Less than one inch of rainfall was reported throughout the region, which made for ideal harvest conditions. Harvesting and ginning were in full swing throughout the region.

Backlogs of modules continued to accumulate on gin yards. According to the National Agricultural Statistics Service’s (NASS) Crop Progress report, released on October 11, harvesting advanced steadily to 75 percent completed in Louisiana and surged to 54 percent in Mississippi. Virtual and in-person industry meetings were being planned and attended.

Trading

North Delta

  • No trading activity was reported.

South Delta

  • No trading activity was reported.

Southwestern Markets Regional Summary

East Texas

Spot cotton trading was light. Supplies and producer offerings were moderate. Demand was light. Producers continued to deliver bales to fulfill contracts. Producer’s price ideas were firm to higher. Bids were rejected. Most merchants were selective and did not want to add to their inventory unless the lots were primarily color 31 and better, leaf 3 and better, staple 35 and longer.

Average local spot prices were higher. The ICE December futures market trended higher. No domestic mill activity was reported. Foreign mill inquiries were light. There is some interest for lower grades and short staple from Pakistan and Taiwan. Most mills remained on the sidelines due to the volatile ICE futures market and declining consumer demand. The U.S. remained in COVID-19 Pandemic status.

Summer-like weather continues in east and south Texas. Temperatures were in the low 90s for most of the period. No rainfall was recorded. It’s been over a month with no significant rainfall, and sub-soil moisture is dry. Fieldwork was active in prepping fields for spring but could stop to wait for a good soaking. Ginning was steady in the Rio Grande Valley. Harvesting and ginning continued in the Blackland Prairies and Winter Garden.

Producers are thinking ahead to the 2023-crop. Input costs remain high in relation to cotton market prices, and considerations for planting grain remain. Spotty showers passed through cotton-growing areas of Oklahoma mid-week. Much more is needed to recharge underground moisture.

Kansas and Oklahoma harvesting began. Modules were trucked to gin yards. A few gins were operating steadily. The timing is a little later than normal. Cotton samples were graded. The Abilene Classing Office planned to run 1 shift this season. Warehouses received the first bales of 2022-crop.

West Texas

Spot cotton trading was inactive. Supplies were light. Demand was light. Average local spot prices were higher. Trading of CCC-loan equities was inactive. Foreign mill inquiries were light. Mill interest was sidelined by excess inventory, lack of consumer demand, and volatile ICE December futures market. Logistics continued to be negatively impacted by the COVID-19 Pandemic.

Harvesting and ginning were underway for some, with daytime high temperatures in the low 50s to upper 80s. Widespread accumulated rainfall from trace amounts up to around four inches was received, with heavier amounts reported in the Rolling Plains. Hail was reported at some locations. Local experts described that a light amount of lint quality degradation had begun from the precipitation.

Fieldwork interruptions lingered into the next reporting period because of rain in the nearby forecast. A few gins reported a slack in operations due to a lack of modules on the gin yards, and other gins will wait until the meter is read before initiating pressing cotton. Some producers considered waiting for a freeze than to chemically defoliate their crop. A couple of Rolling Plains gins will not operate this season. Local sources reported more acreage was shredded last week. Producers attended meetings.

The Lubbock Classing Complex reported that 5 gins submitted 2,630 bales graded with the season average predominate color 12 at 62.6 percent, leaf 2 at 49.5 percent, staple averaging 35.86, mike averaging 4.29, strength averaging 31.94, and uniformity averaging 80.93 for week ending October 13. Complete quality reports can be found at: https://mymarketnews.ams.usda.gov/ or https://www.ams.usda.gov/market-news/cotton-tobacco.

Trading

East Texas

A light volume of color mostly 31 and better, leaf 2 and better, staple 36 and 37, mike averaging 46.3, strength averaging 30.3, and uniformity averaging 82.1 sold for 93.25 to 95.00 cents per pound, FOB warehouse (compression charges not paid). Similar lots containing mostly staple 35 sold for around 85.75 cents per pound, same terms as above.

West Texas

  • No trading activity was reported.

Western Markets Regional Summary

Desert Southwest (DSW)

Spot cotton trading was inactive. Supplies and demand were light. Producer’s price ideas were firm for new-crop cotton. Average local spot prices were higher. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. The U.S. continues in COVID-19 Pandemic status. Temperatures were in the high 80s to low 100s in the DSW. Ginning was steady in Yuma, AZ.

Harvesting gained momentum throughout the region. Initial ginning began in New Mexico. No ginning was reported in central Arizona and El Paso, TX. Modules were trucked to gin yards. Local sources reported ginning may start next week.

San Joaquin Valley (SJV)

Spot cotton trading was inactive. Supplies and demand were light. Average local spot prices were higher. Producer’s price ideas were firm for new-crop cotton. No forward contracting or domestic mill activity was reported. Foreign mill inquiries were light. The U.S. remains in COVID-19 Pandemic status.

Unseasonably warm weather continued. Temperatures averaging 10 degrees above normal for this time of year. No rainfall was received in the period. Harvesting gained momentum. A few gins were pressing cotton. Producers shredded stalks in compliance with the California Pink Bollworm program. The Visalia Classing Office (VCO) added 5 new seasonal cotton classers to the team. The VCO hosted the FARMS Leadership program, which introduces careers in agriculture and environmental sciences to high school students.

American Pima (AP)

Spot cotton trading was inactive. Supplies and demand were light. No forward contracting or domestic activity was reported. Producer’s price ideas were firm for new-crop cotton. Average local spot prices were steady. Foreign mill inquiries were light. The U.S. remains in COVID-19 Pandemic status.

Unseasonably warm weather was the norm throughout the Far West. Defoliation activities advanced in the region. Harvesting is active in the San Joaquin Valley of California. Modules were trucked to gin yards, but gins were waiting for a buildup of modules before cranking up gins. Sources reported ginning was set to begin next week. Producers shredded stalks in compliance with the California Pink Bollworm program.The Visalia Classing Office will host a group of Texas AP gin personnel next week as well.

Trading

Desert Southwest

  • No trading activity was reported.

San Joaquin Valley

  • No trading activity was reported.

American Pima

  • No trading activity was reported.

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